API Annual Report: Production Up, Environment Cleaner, Thx to Gas
The American Petroleum Institute’s (API) president and CEO, Jack Gerard, delivered the keynote address at API’s Seventh Annual State of American Energy event in Washington, DC on Wednesday. At the same event the API released the “State of American Energy 2017” report (full copy below) highlighting the energy issues that will shape America’s economic and political news this year. Gerard says we have now fully debunked the insane ramblings of the environmental left in this country, proving that we can grow our energy use and our energy production, while at the same time creating a cleaner environment. According to the EIA, in the first six months of 2016, carbon emissions from electricity generation were at their lowest point in 25 years even as electricity demand rose–thanks to greater use of natural gas. Below are highlights of Gerard’s speech along with a copy of the newly released report…
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We are speechless (and that doesn’t happen often). Get a load of this: “A new report from transparency watchdog group Open the Books documents an explosion in the number of federal agencies with gun-toting, badge-wielding law enforcement divisions. The report, called “The Militarization of America” [full copy below] details the astonishing scope of federal police power. There are now over 200,000 federal officers with arrest and firearm authority, in a whopping 67 different federal agencies….We all understand that the EPA is tasked with enforcing environmental laws. But does it really need a full-blown military-style police force? Congress granted the EPA police powers in 1988, but not with SWAT teams in mind. Even now, the agency says its Criminal Enforcement Program ‘enforces the nation’s laws by investigating cases, collecting evidence, conducting forensic analyses, and providing legal guidance to assist in the prosecution of criminal conduct that threatens people’s health and the environment.’ Well yes, but also by midnight raids with SWAT teams and attack dogs, confiscating private property, hauling people off to jail for accidentally spilling a barrel of oil, and other ‘enforcement’ horrors”…
The “best of the rest” – stories that caught MDN’s eye that you may be interested in reading. In today’s lineup: NY’s renewable energy plan creating energy poor; Vallourec rebounds as rig counts rise; OH Utica rig count edges up; meet the group (that nobody knows) influencing Trump’s energy policies; court delays appeal over Obama fracking rule; Congressman says “swift action” coming to replace o&g methane rules; ExxonMobil’s new natgas deydrating tech; and more!
Rex Energy announced yesterday the company has cut a deal with Antero Resources to sell all of Rex’s “Warrior South Area” assets to Antero. Which may should like a big deal, but really isn’t. The assets sold include 4,100 net acres in perhaps the hottest part of the Ohio Utica Shale: Guernsey, Noble and Belmont counties. It also includes 14 Utica Shale wells. However, the wells are only producing 9 million cubic feet per day (MMcf/d) collectively. The sale price is $30 million–or $7,317 per acre. Rex says the acreage and wells are in a “non-core” area for the company. Rex, a driller focused mainly on the Marcellus/Utica (headquartered in State College, PA), has had its share of financial challenges. In December the company was warned by the New York Stock Exchange that the per share price is too low and the stock is in danger of being delisted (see 
To say that it was a roller coaster ride for Williams in 2016 doesn’t even come close to reality. The company received no less than two takeover/merger attempts. Energy Transfer Equity’s (ETE) billionaire CEO Kelsy Warren propositioned Williams for over six months before going public with his overtures last year (see 
Ladies and gentleman: Start your drill bits! Yesterday Antero Resources, one of the biggest drillers in the Marcellus/Utica, released their road map for what lies ahead in 2017 for the company. Among the gems: The company plans to do a serious amount of drilling. They will have drilled 170 new wells, bringing them online, by the end of the year, with another 30 drilled but not completed. Antero will spend $1.3 billion to do it–with another $200 million spent on land deals. Daily production is forecast to average somewhere around 2.1 to 2.2 billion cubic feet (Bcf) per day, up 20-25% over production in 2016. Observation: Antero will spend about what it spent last year, but still goose production by nearly a quarter more than last year. Talented folks! Antero, as we’ve previously highlighted, has what we consider to be the best hedging in the business. They announced two-thirds of their production for 2017 is hedged at $3.68/Mcf (thousand cubic feet). In fact, all of their production for this year is hedged, at various price points. The spot price of natural gas today, as this was being written, was $3.27/Mcf. Here is Antero’s success road map for the next 365 days…
In 2012, the Pennsylvania Dept. of Environmental Protection (DEP) launched an “expedited” review process for erosion and sediment control general permits that it grants when drillers or pipeline companies plan to push dirt around on more than 5 acres at a time. Which means every pipeline built and every shale well pad constructed. The expedited review process shortened the time to get a permit down to as little as 14 days–provided the paperwork was filled out correctly. The DEP conducted an internal review and found that 59% of the time they didn’t get the paperwork in a form they wanted, so they disqualified those applications. Now the DEP is revising its rules for expedited review, meaning they’re pretty much doing away with it. Welcome back to long delays in getting permits to push dirt around. This action appears to be a response to stinging criticism from the PA legislature that permits, which are supposed to be issued in 14 days, are taking over 100 days–a charge leveled by PA Sen. Camera Bartolotta who is introducing legislation to put a burr under the DEP’s saddle. So the DEP is saying fine, we’ll just change it back to the way it used to be. You can now expect long permit delays from the outset. Your state government at work, serving the people…
As we do every month, MDN tracks how many rigs oilfield services company Patterson-UTI Energy reports operating–as a proxy for when/if the drop in rig counts for the Marcellus/Utica will turn around. Patterson operates a number of rigs in the northeast, as well as other areas of the continental United States (and Canada). Month by month Paterson’s rig count has declined over the past year plus–until June (see 
SWEPI, formerly known as Shell Western E&P Inc., is the North American land-based drilling arm of giant Royal Dutch Shell. SWEPI has an active drilling program in the Marcellus/Utica region. Some of that active program has traditionally been in shallow, or conventional (not shale) drilling. Using a broker, SWEPI has put up a mammoth 189,000 acres of its conventional/shallow leases and wells for sale by auction. The leases and some 1,500 active oil and gas wells are located in Forest, Elk, McKean, and Warren counties in Pennsylvania, and Cattaraugus County in New York. The sale includes shallow rights (not shale rights) only. SWEPI claims there are another 10,000 potential well locations. Here’s the details…
American Water Management Services (AWMS) owns a wastewater injection well in Trumbull County that supposedly caused a low-level earthquake (that nobody could feel) in 2014. Two wells located at the site, both operated by AWMS, were “temporarily” shut down by the Ohio Dept. of Natural Resources following the quake (see 
In August of 2016 the Federal Energy Regulatory Commission (FERC) finally granted a certificate to Dominion to build its Leidy South Project, a $210 million to build and/or upgrade six compressor stations along the DTI pipeline system in Pennsylvania, Maryland and Virginia (see 
Magnum Hunter Resources Corporation (MHR), a driller 100% focused on the Marcellus/Utica emerged from bankruptcy last May, less than five months after filing (see 
In 2014 we brought you the interesting story of strippers in the Marcellus–stripper wells, that is (see 
T. Boone Pickens, a Texas oil man (pronounced “aaalll man” in Texas) needs no introduction. In a post on LinkedIn, Boone offers some great advice to the incoming President-elect Donald Trump on how The Donald can make America great again, using domestic energy resources. Boone’s plan has two parts: (1) Don’t screw up what we have going for us. (2) Don’t settle for what we’ve done so far. Here’s some great insights from someone The Donald should listen to…
A kerfuffle erupted yesterday when Chapter IV Investors, a Charlotte, NC-based investment firm with investments in EQT, Range Resources and Antero Resources, announced it had sent a letter to EQT urging the company to consider merging with either Range Resources or Antero Resources. Chapter IV, which is essentially two big-money investors (W. Barnes Hauptfuhrer, Managing Partner and Portfolio Manager, and Ryan J. Jack, Partner), does not own enough stock in any of the companies (less than 1% in each) to throw its weight around like a corporate raider. Rather, it appears to be two investors attempting to grab the attention of these companies and their shareholders by issuing a press release (full copy below) with a plan they say would create a new Marcellus/Utica driller worth more than $25 billion. Obviously the value of investments for Chapter IV would go up under such a scenario–so there is self-interest at work here. However, we don’t detect any kind of bullying on the part of Chapter IV, like that of a raider Carl Icahn (successful takeover of Chesapeake Energy & Cheniere Energy) or Keith “Mini-Me” Meister (unsuccessful attempt to takeover Williams). Rather, it appears to be a couple of investors who believe there is an honest and good case for a combination of EQT with another company, and were willing to spend $500 on a press release to make their case. Are they right?…